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How Should I Calculate my BTC Mining Revenue?

How Should I Calculate my BTC Mining Revenue?

“Mining revenue” has always been the most essential indicator of crypto mining. That said, how should miners estimate their daily revenue when mining cryptos with mining rigs? What are the factors that affect mining revenue? Today, we will introduce how the mining revenue and payback period are calculated in the context of BTC mining.

Before calculating the mining revenue, you should first get familiar with the following concepts.

• Difficulty: An indicator that measures how difficult it is to mine cryptos. The mining difficulty of the BTC network varies. Right now, the BTC difficulty is adjusted every two weeks (2,016 blocks). It is a relative measure of how difficult it is to add a new block to a blockchain.

• Hashrate: The number of hash computations a mining rig completes every second (in the unit of TH/s). This measure of computation capacity indicates the performance of a mining rig.

• Network Hashrate: The total hashrate of all mining rigs competing in the network. The network hashrate of the present difficulty cycle decides how the mining difficulty will be adjusted in the next cycle. If the network hashrate rises, mining would become more difficult, and the mining revenue per terahash would go down.

• Dynamic Balance Between the Network Hashrate and Crypto Price: When the crypto price rises, more hashing power will be invested in mining. As a result, the network hashrate will go up and mining will become more difficult, thereby reducing the mining revenue per terahash. On the other hand, when the token price drops, the network hashrate will go down and mining will become less difficult, thereby raising the mining revenue per terahash.

• Block Rewards: The term refers to crypto rewards offered to miners when they mine a new block. Block rewards are the greatest source of revenue for miners.

Daily Mining Revenue (theoretical): Block rewards divided by the number of days needed to mine a block according to the miner’s hashrate and mining difficulty. It should be noted that this is a theoretical figure that does not account for factors such as mining luck. At the same time, daily mining revenue (theoretical) is also the most important indicator of someone’s mining revenue.

• Daily Mining Revenue (Theoretical) = Hashrate Per Mining Rig/Network Hashrate*Daily Total BTC Mining Revenue

The current BTC block reward is at 6.25 BTC, the daily total reward stands at 900, and the total hashrate of the BTC network is about 203 EH/s. According to the formula (1 exahash = 1,000 petahashes, and 1 petahash =1,000 terahashes), the BTC mining revenue (theoretical) is approximately 0.0000458 BTC/terahash/day.

Miners can check the BTC mining revenue (theoretical) per terahash through https://btc.com/ (Earnings/T (PPS), as shown below). In addition, the mining revenue in many profit calculators is also the theoretical figure.

Network Status.png

Source: https://btc.com

Of course, the above method only accounts for the static returns/costs of mining. In reality, one must also consider the fluctuating crypto price and mining difficulty (network hashrate). Moreover, when mining rigs are running, they might suffer network/power failures and may not be able to run normally, which triggered the invention of another concept called “mining revenue (actual)”.

• Daily Mining Revenue (actual): The number of coins mined during the actual operation of mining rigs. The actual revenue is subject to objective factors (e.g. the mining luck, power supply of the mining site, network stability, mining rig conditions, etc.), and it may differ from the theoretical figure.

Daily Mining Revenue (Actual) = Actual Hashrate Per Mining Rig/Network Hashrate*Daily Total Coin Mining Revenue

However, the mining revenue does not equal to the mining profit. To calculate the mining profit, miners must also account for costs such as the electricity fee, management fee, etc. 

• Electricity Price/Fees: Electricity Fees = Electricity Price*Power Consumption. If the electricity price is cheaper, the proportion of electricity fees in the total cost would be lower, which would improve the mining profit of miners.

• Power Consumption & Hashrate: Power consumption determines how much electricity is consumed when a mining rig is running, whereas the hashrate affects the overall potential energy of mining rigs. With lower power consumption and higher hashrates, mining rigs can yield greater returns and better cope with changes in the mining difficulty, as well as price swings.

• Mining profits: The net mining profit, calculated by subtracting various service fees from the mining revenue (theoretical or actual) of a mining rig.

Mining Profits = Mining Revenue-Electricity Fees-Management Fees

The figure measures the real profit of miners. Normally, miners also use the figure to calculate their payback period, as well as the mining ROI.

Daily Electricity Fee = Electricity Price*Power Consumption of the Mining Rig*24 Hours*Hashrate

Theoretical Daily Mining Profits = (Theoretical Daily Mining Revenue-Daily Electricity Fee)* Hashrate

Daily Management Fees = Daily Mining Profits*Management Rate

Daily Mining Net Profits =Daily Mining Profits-Daily Management Fees±Repair & Maintenance Fees

If you purchase a mining service on OXBTC, the following terms will also be relevant.

• Repair & Maintenance Fees: The total amount charged by OXBTC for repair or compensation in cases like failures, relocations, and shutdowns during the operation of mining rigs.

• Management Fees: The fee charged by OXBTC for providing the hosting service.

• Mining Net Profits (Actual): The net profits of mining, which equal the mining revenue of OXBTC services minus the service fees during actual operation.

Mining Net Profits (Actual)=Mining Profits-Management Fees±Repair & Maintenance Fees

Mining Net Profits.png